25 Percent Increase in Earnings Per Share and 22 Percent Increase in Net Income, Exclusive of Impact of Redemption

South San Francisco, Calif. -- October 10, 2001 --

Genentech, Inc. (NYSE: DNA) today announced a 25 percent increase in earnings per share1 and a 22 percent increase in net income driven by a 34 percent increase in product sales for the third quarter of 2001, exclusive of the ongoing impact of the 1999 redemption of Genentech's Special Common Stock and related accounting treatment2.

For the three months ended September 30, 2001:

Earnings per share for the third quarter of 2001 increased 25 percent to 20 cents per share, compared to 16 cents per share for the third quarter of 2000, exclusive of the ongoing impact of the 1999 redemption of Genentech's Special Common Stock and related accounting treatment.

Net income for the third quarter of 2001 increased 22 percent to $105.4 million, compared to $86.2 million for the third quarter of 2000, exclusive of the ongoing impact of the 1999 redemption of Genentech's Special Common Stock and related accounting treatment.

Due to recurring charges related to the redemption, the company recorded third quarter net income of $42.7 million, or net income of 8 cents per share, as compared to a net income of $5.8 million, or a net income of 1 cent per share, in the third quarter of 2000.

Revenues for the third quarter of 2001 increased 24 percent to $556.1 million from $447.3 million in the third quarter of 2000. This revenue growth was driven primarily by sales of Genentech's BioOncology products, Rituxan® (Rituximab) and Herceptin® (Trastuzumab). Total product sales increased 34 percent in the third quarter of 2001 to $448.7 million from $334.2 million in the third quarter of 2000.

"Our strong third-quarter performance reflects the continuation of our growth strategy and demonstrates progress towards achieving our financial goals for the year," said Arthur D. Levinson, Ph.D., Genentech's chairman and chief executive officer. "Along with solid sales performances from our marketed products, Rituxan and Herceptin, we made progress in moving projects through our pipeline, including the approval and launch of Cathflo Activase. We continue to remain focused on our corporate goals and dedicated to our mission of developing breakthrough medicines for the people who need them."

Product Sales

Marketed products sales increased 34 percent in the third quarter of 2001 to $448.7 million from $334.2 million in the third quarter of 2000.

Rituxan sales in the third quarter of 2001 increased 80 percent to $212.8 million from $117.9 million in the third quarter of 2000. This sales increase is due primarily to increased market penetration for the treatment of non-Hodgkin's lymphoma.

Herceptin sales in the third quarter of 2001 increased 16 percent to $83.9 million compared to $72.6 million in the third quarter of 2000. Since launch, an increase in the penetration into the metastatic breast cancer market has contributed to a positive sales trend and consistent quarter-over-quarter growth in the United States.

Combined sales of Genentech's three cardiovascular products, Activase® (Alteplase, recombinant), TNKase (Tenecteplase) and Cathflo Activase® (Alteplase), during the third quarter of 2001 decreased 4 percent to $48.6 million compared to $50.7 million in the third quarter of 2000.

Growth hormone sales during the third quarter of 2001 increased 11 percent to $67.7 million compared to $61.1 million in the third quarter of 2000.

Pulmozyme® (dornase alfa) Inhalation Solution sales increased 9 percent to $32.8 million in the third quarter of 2001 compared to $30.0 million in the third quarter of 2000.

Total Costs and Expenses

Costs and expenses increased as anticipated in the third quarter of 2001 as compared to the third quarter of 2000.

Research and development (R&D) expenses increased in the third quarter of 2001 to $128.2 million compared to $113.6 million in 2000. R&D expenses as a percent of revenues in the third quarter of 2001 were 23 percent, compared to approximately 25 percent in the third quarter of 2000. R&D expenses as a percent of revenues are expected to vary over the next several periods dependent on possible in-licensing agreements and as products progress through late-stage clinical trials.

Primarily due to the increase in product sales, cost of sales increased to $96.0 million in the third quarter of 2001 from $75.6 million, exclusive of expenses related to the redemption and push-down accounting in the third quarter of 2000.

Marketing, general and administrative (MG&A) expenses increased during the third quarter of 2001 to $109.4 million compared to $94.1 million in the third quarter of 2000 due primarily to higher royalty expenses.

Collaboration profit-sharing expenses increased to $65.8 million in the third quarter of 2001 from $37.6 million in the third quarter of 2000. The increase was due primarily to increased Rituxan profit-sharing expense due to higher Rituxan sales.

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures, and markets human pharmaceuticals for significant unmet medical needs. Fifteen of the currently approved biotechnology products stem from or are based on Genentech science. Genentech manufactures and markets ten biotechnology products directly in the United States. The company has headquarters in South San Francisco, California, and is traded on the New York Stock Exchange under the symbol DNA.

1 All earnings (loss) per share data and number of shares reflect the stock split effective October 2000.

2 The accounting treatment under U.S. Generally Accepted Accounting Principles (GAAP) requires Genentech to establish a new accounting basis for the company's assets and liabilities. This accounting treatment is the result of Roche's exercise of its option to redeem Genentech's Special Common Stock in June 1999. The company's new accounting basis is based on the cost of Roche's 1990 through 1997 purchases of Genentech shares and the redemption of Genentech's Special Common Stock on June 30, 1999. Roche's cost of acquiring Genentech was "pushed down" to Genentech and reflected on Genentech's financial statements beginning June 30, 1999. The effect of push-down accounting on Genentech's third quarter 2001 and 2000 consolidated statements of operations include recurring charges for the amortization of goodwill and other intangibles and for 2000, the costs related to the sale of inventory that was written up at the redemption.

Webcast:

Genentech will be offering a live webcast of a discussion by Genentech management of the earnings and other business results on Wednesday, October 10, 2001 at 2:30pm PT. The live webcast may be accessed on Genentech's website at http://www.gene.com. This webcast will also be available after the call via the website until close of business October 17, 2001. An audio replay of the webcast will be available beginning at 4:30pm PT on October 10, 2001 until 4:30pm PT October 17, 2001. Access numbers for this replay are: 1-800-633-8284 (domestic) and 1-858-587-5842 (international); passcode number is 19704373.

Genentech Business and Product Development Events in the Third Quarter, 2001

Marketed and Pipeline Product Events

BioOncology

Tarceva (OSI-774): With partners OSI Pharmaceuticals and Roche, announced initiation of a Phase III clinical trial evaluating the use of Tarceva in combination with Carboplatin (paraplatin) and Paclitaxel (taxol) for the treatment of non-small cell lung cancer.

Cathflo Activase® (Alteplase): Announced that Cathflo Activase, a tissue plasminogen activator (t-PA), was approved by the U.S. Food and Drug Administration (FDA) for the restoration of function to central venous access devices (CVADs). Cathflo Activase is the only marketed thrombolytic available for this indication and offers medical professionals a viable treatment option for a CVAD complication that can hinder patient care.

TNKase (Tenecteplase): Announced ASSENT 3 trial results at the European Society of Cardiology meeting demonstrating full-dose TNKase with the low-molecular-weight heparin, Lovenox® (enoxaparin sodium) as a promising reperfusion therapy regimen.

Xanelim (Efalizumab): With partner XOMA, Ltd., presented initial positive results from the second of two pivotal Phase III investigational trials of Xanelim at the American Academy of Dermatology "ACADEMY 2001" meeting. Based on discussions with the FDA, the companies will be conducting an additional pharmacokinetic study before submitting the Biologics License Application.

Xolair (Omalizumab): Productive discussions are ongoing with the FDA. Additional meetings with the FDA are scheduled during the next several weeks and these discussions will enable the companies to give a more accurate timeline for re-submission.

Corporate Business Events

A U.S. Appeals Court reinstated an earlier ruling preventing Bio-Technology General Corp. (BTG) from selling its human growth hormone product and sent the case back to the lower court for a determination of whether BTG infringes Genentech's patent.

Began litigation for a trial to decide a contract dispute between Genentech and City of Hope, a cancer research and treatment center in Duarte, California. The contract dispute relates to a 1976 agreement covering sponsored research conducted by two City of Hope scientists, Arthur Riggs and Keiichi Itakura, that Genentech funded.

In July, passed a full Good Manufacturing Practices inspection by the FDA Team Biologics confirming the company is in a full state of manufacturing compliance.

Announced that Genentech was named, for the tenth time, one of the "100 Best Companies for Working Mothers" by Working Mother Magazine.

Announced the appointment of Andrew C. Chan, M.D., Ph.D., to senior director of immunology in Genentech's Research department.

Donated over $1 million to the American Red Cross Sept. 11 Disaster Relief Fund on behalf of the company and its employees.

(1) Pro Forma amounts exclude recurring charges related to the redemption, costs in 2000 related to the sale of
inventory that was written up at the redemption and their related tax effects.

(2) The results for the quarter ended September 30, 2000 have been restated to reflect the adoption of the
Securities and Exchange Commission's Staff Accounting Bulletin No. 101 on revenue recognition as of January
1, 2000.

(1) Pro Forma amounts exclude recurring charges related to the redemption, costs in 2000 related to the sale of
inventory that was written up at the redemption and their related tax effects. In addition, pro forma
excludes the cumulative effect of the changes in accounting principle net of tax, adopted in 2001 and 2000,
and the changes in fair value of certain derivatives ($10.0 million) recorded in Q1 2001 under Statement of
Financial Accounting Standard 133 (FAS 133).

(2) The results for the three- and nine-months ended September 30, 2000 have been restated to reflect the
adoption of the SEC's Staff Accounting Bulletin No. 101 on revenue recognition as of January 1, 2000, and
the related cumulative effect of a change in accounting principle associated with contract revenues
recognized in prior periods. The related deferred revenue is being recognized over the term of the
agreements.

(3) Genentech adopted Accounting for Derivative Instruments and Hedging Activities on January 1, 2001, and
recorded a cumulative effect of a change in accounting principle related to recording derivative instruments
at fair value.